Wake up and smell the ginseng: International trade and the rise of incremental innovation in low-wage countries

Diego Puga and Daniel Trefler

Journal of Development Economics, 2010, vol. 91, issue 1, 64-76

Abstract: Increasingly, a small number of low-wage countries such as China and India are involved in incremental innovation. That is, they are responsible for resolving production-line bugs and suggesting product improvements. We provide evidence of this new phenomenon and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. The model explains why levels of involvement in incremental innovation vary across low-wage countries and across firms within each low-wage country. We draw out implications for sectoral earnings, living standards, the capital account and, foremost, international trade in goods.

Keywords: International; trade; Low-wage; country; innovation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (94)

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Related works:
Working Paper: Wake up and smell the ginseng: International trade and the rise of incremental innovation in low-wage countries (2009)
Working Paper: Wake up and Smell the Ginseng: International Trade and the Rise of Incremental Innovation in Low-Wage Countries (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:91:y:2010:i:1:p:64-76

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